Jewellery shines with levy rollback

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New Delhi, May 7: Finance minister Pranab Mukherjee has rolled back the 1 per cent excise duty on unbranded gold jewellery proposed in this year’s budget.

“A proposal that has attracted public attention is the implementation of central excise duty on unbranded precious metal jewellery at the rate of 1 per cent. I would like to reiterate that this (levy) was well intended and introduced not so much for raising revenues but for rationalisation and movement towards the goods and services (GST) tax,” Mukherjee said in the Lok Sabha today.

The excise duty on branded jewellery, imposed last year, was also rolled back.

“The sentiments inside and outside the House have indicated that we are not ready for it and the government has decided to withdraw the levy on branded and unbranded jewellery from March 17, 2012,” Mukherjee added.

A proposed 1 per cent excise duty on unbranded jewellery and the doubling of gold import duty to 4 per cent had sparked a nationwide furore among jewellers, who had gone on a 21-day strike after the budget. However, the extension of the levy on branded jewellery imposed last year met with no opposition.

The higher customs duty on gold import stays.

“This is a step towards mitigating the genuine problems of the lakhs of jewellery traders in the country as also crores of other people who are dependent upon jewellery trade for their livelihood,” Praveen Khandelwal, secretary-general of the Confederation of All India Traders, and Vimal Goel, president of the Delhi Bullion & Jewellers Association, said in a joint statement.

The finance ministry was initially reluctant to withdraw the tax as it saw the mild duty as an important weapon to fight black money.

The government now wants to concentrate on the scrutiny of jewellers’ accounts in tracking black money.

Mukherjee also announced hiking the threshold for tax collected at source on cash purchase of jewellery to Rs 5 lakh from Rs 2 lakh.